HMRC issues new guidance to help beauty professionals determine employment status

HM Revenue and Customs (HMRC) has published new guidance designed to help beauty and hair  professionals determine their employment status for tax purposes.

Developed in collaboration with industry stakeholders, the guidance includes information about common working practices, such as the "rent a room" format, and how they relate to employment status. 

It explains how HMRC’s Check Employment Status for Tax (CEST) tool can help determine whether an individual is employed or self-employed for tax purposes.

The guidance is includes examples of common scenarios that indicate whether an individual might be employed (such as having set working hours determined by the salon) or self-employed (such as setting your own prices and maintaining your own client list).

Kelvin Shorte, deputy director, Taskforces & Specialist Compliance, HMRC, said: “We understand the hair and beauty industry operates with various working arrangements and it’s vital that both salon owners and professionals get their tax status right.

"This new guidance responds directly to requests from the industry for clearer, sector-specific information.

“Whether you’re a salon owner with staff or someone who rents out chairs in your premises, this guidance will help you understand your obligations so you can get your tax right first time.”

Also embedded in the guidance page is a new video, clarifying that employment status isn’t a matter of choice and outlines the different tax obligations for employed and self-employed individuals.

It also includes information about VAT registration requirements and the importance of written agreements when renting a space.